Daiichi Sankyo turns over domestic logistics to Yasuda Warehouse

Japan's Yasuda Warehouse

While headcount is the first place drugmakers look when it comes time to whack some costs off the balance sheet, supply chains and manufacturing networks are increasingly getting a look by big drugmakers. Japan's Daiichi Sankyo is reworking its manufacturing network and says that in Japan, it has even turned over some of its warehousing and logistics to another company.

The drugmaker in April outsourced the distribution center operations of Daiichi Sankyo Logistics to Yasuda Warehouse Co., the drugmaker said today in its earnings report. The move is part of a larger effort by Daiichi Sankyo to reorganize its three Japanese supply chain subsidiaries--Daiichi Sankyo Propharma, Daiichi Sankyo Chemical Pharma and Daiichi Sankyo Logistics--into two operating units by April 2015.

Under that plan one company will supply drug precursors and active ingredients, and the other will handle drug formulation, packaging and the related drug distribution functions. Toward that end the company a year ago integrated its Propharma and Chemical Pharma plants in Odawara into a single facility in April 2013.

Outside of Japan, the company said it is readying its manufacturing network for the launch in Western markets of edoxaban, its anticoagulant candidate that it hopes to get approved this year. It also said it is putting more resources into upgrading its manufacturing operations in China.

But the biggest change in manufacturing for Daiichi Sankyo will be when it finalizes the sale of Ranbaxy Laboratories to Sun Pharmaceutical in a $3.2 billion stock swap that will make the Japanese drugmakers Sun's largest shareholder with about 9%. Since buying majority control of India's largest generic drugmaker in 2008 for $4.6 billion, Ranbaxy has had nothing but problems with the FDA for drug testing and manufacturing failures. Sun, which with the merger will become India's largest generic drugmaker, has promised to return the four Ranbaxy plants the FDA has banned back to compliance and shipping again to the U.S.

- here's the financial results (PDF)